95 2500 Cummins transmission problems?

I have a '95 Ram 2500 5.9L Cummins that is giving me some tranny problems. First off, some history on the vehicle. The truck was previously my parents and they did not notice any problems while they owned it. It has been sitting for the last 2 months and was driven very little over the last year.

After receiving the truck I have notice that it has some tranny issues. When cold I have a hard time even getting up and out of my driveway (slight incline). I was running at ~2000 rpm and just getting it to go.

After it warms up I still notice that it has a hard time shifting from 2-3. I have also noticed that driving at ~60 mph it drops back and forth out of OD while driving straight and level with no acceleration. If I do accelerate while it drops out of OD it feels like it is sliping. Anyone out there have any suggestions on where to start?

It sounds like it is low on fluid.
The older transmissions have a adjustable rod that connects to the throttle cable. This rod is the means that the transmission uses to sense the throttle position. Maybe it is out of adjustment and it is causing the trans to shift out of overdrive too soon. I have driven a couple of Dodge Trucks that did this. If the problem is not resolved, the transmission will "shift itself to death" (wearout) very quickly. Once the trans shifts into OD, the ECU will lock the torque converter. The transmission will remain in OD regardless of throttle position if the computer keeps the converter locked. This system helps keep the transmission in OD even if you give it more throttle to maintain speed or mildy accelerate. It could be that there is an electrical problem with the lockup signal, so the transmission constantly hunts back and forth instead of getting locked in OD.

I checked the fluid and it looks clean. The fluid level is not low, actually it is a little hi, could that cause the problem?

When you start it in the morning idle it in neutral the torque converter can drain back into the pan causing what seems like hesitation in the morning. Keep in mind that dodge trannys for some strange reason don't circulate fluid in park.

Thanks for the reply, however I think that it is going to need a rebuild. I called several tranny shops and they all told me that it sounds like the seals are shurnk and leaking fluid by them, when it warms up the seals expand and the tranny works fine. Looks like it is going to be a few $$ to take care this one. Oh well, I guess I will get it rebuilt stronger and up the HorsePower/torque a bit. Not the end of the world.

Thanks,
Weoxstan